Francis Marais, head of Glacier Research, re-introduced and pointed to what’s new in the Glacier Life Investment Solution Funds which are available via the Sanlam Wealth Edge Endowment Plan. These funds are actively managed according to the different risk profiles and clients can diversify across different asset managers and styles.
The range currently includes a conservative, cautious, moderate and moderate aggressive solution. In the second quarter of this year, we’ll be launching the Glacier Diversified Cautious Growth Solution, also available via the Wealth Edge Endowment Plan.
Backdrop to the launch of the new fund
The South African investment market makes up less than 1% of world GDP, having declined even further in recent years. We’ve also seen the number of listings on the JSE fall – there are currently 27% fewer listings than in 2015. The result is that the opportunity set for local equity investors is becoming smaller and smaller.
SA bonds are, however, currently really attractive, with the SA relative real yield higher than it’s ever been.
What about ZAR?
Offshore investing has always been tricky for local investors, due to the rand being a volatile currency, where bouts of appreciation can detract from returns. Since 1998, the rand has, more times than not, depreciated and added to performance for those invested offshore.
When the rand appreciates, returns in the offshore space are negatively impacted. SA fixed income can act as a hedge against a strengthening rand for those invested offshore and we’ve seen that bonds have given a good five-year return figure, when the rand has appreciated.
The MSCI World returns in base currency. Converting these returns into ZAR does increase volatility slightly, but this does provide a better risk-adjusted return.
The Glacier Diversified Cautious Growth Solution Fund
It is against this backdrop that we decided to launch the Glacier Diversified Cautious Growth Solution Fund. The Fund gives investors the best of both active and passive worlds by combining SA bonds (passive) and global growth (represented by developed and emerging markets). In addition, being able to choose top managers in the offshore space provides a much broader opportunity set. Investors benefit by having better exposure to global, quality companies, and brands and industries not available in the local market – thereby complementing their existing SA investments while hedging away some of the risks locally and enjoying growth from global markets.
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